A personal residence may be an ideal gift under the right circumstances. A personal residence may take the form of a single-family house, a condominium, or a duplex. It may be owner-occupied or rented. If you give your residence outright to the Church or one of its affiliated charities, you receive a charitable deduction for the donation. You also avoid capital gains tax on the amount, if any, your residence has increased in value since you purchased it, and you are not subject to gift or estate taxes since the value of your residence is removed from your estate.
The typical donor:
- Has paid off the mortgage.
- Holds clear title to his or her personal residence.
- Does not plan to pass the personal residence to heirs.
- Desires to live someplace other than the personal residence.
Gift features and benefits:
- Immediate income tax deduction
- Avoidance of capital gains taxes
- Deduction based on fair market value; or present value of remainder interest if placed in a Charitable Remainder Unitrust
- You may continue living in the residence if you use a Retained Life Estate Deed
How Do I Make a Gift of a Personal Residence?
A gift of a personal residence to the Church or one of its institutions must be reviewed and evaluated by the Church Real Estate Division. Philanthropies can assist you with this process. A Real Estate Packet (Download Adobe Acrobat to view this packet) of specific information about the personal residence must be completed and sent to Philanthropies. Once a Real Estate Packet is received by Philanthropies, the evaluation process may take 60 to 90 days to complete. This process includes a physical inspection, environmental assessment, title report, appraisal, and so forth. When the evaluation is complete, you will receive notification of the results.
For tax purposes, you must obtain your own appraisal to determine the fair market value you claim on your income tax return. Your tax return must include IRS form 8283 signed by your professional appraiser.
How Do I Make a Gift of a Personal Residence Using Gift-Planning Tools?
A personal residence can also be given to the Church or one of its institutions with a Retained Life Estate Deed Using a Personal Residence or Farm. This planning tool allows you an immediate income tax deduction while you continue to live in and use your personal residence. If you do not plan to live in the residence, residence property can also make an ideal gift by funding a Charitable Remainder Unitrust, which provides you both income for life and numerous tax benefits. A personal residence can also be given through your Will or Revocable Trust.
Other Facts You Should Know about a Gift of a Personal Residence
A gift of your personal residence may have an emotional impact on family members and should be considered in relationship to other elements of your financial and estate plan. Philanthropies professionals will be happy to discuss these issues with you.